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Monday, August 30, 2010

Singapore's shift from a 'poison shrimp' strategy

SINGAPORE'S defence spending last year continued to outpace that of its South-east Asian neighbours, according to a new study released by Australia's Defence Intelligence Organisation.

Defence Economic Trends In The Asia-Pacific 2009, which is based on open-source data, is the latest in a series produced annually by the Defence Intelligence Organisation. Although actual figures are generally provided, some information is presented in constant 2005 United States dollars in order to facilitate comparison.

Singapore's dominance is illustrated by a pie chart showing each country's portion of regional defence expenditure, with South-east Asia defined to include the 10 Asean member-states plus Timor Leste. Singapore accounted for 32 per cent of overall spending in the region last year, with second-place Thailand at 19 per cent.

Malaysia accounted for 17 per cent, Indonesia 13 per cent, Vietnam 11 per cent and the Philippines 5 per cent. The other four countries, with Myanmar excluded due to unreliable information, together made up the remaining 3 per cent.

Data covering a single year can distort the broader picture but Singapore's share has been consistent, with its tally at 32.1 per cent in 2004 and 31.5 per cent in 2000.

This reflects the country's policy of taking the longer view, aiming to keep defence expenditure fairly steady in order to avoid the pitfalls inherent in economic fluctuations. The result is shown in two sets of data presented in the report for last year, although more variation is apparent than public statements suggest.

Singapore's defence spending as a percentage of real gross domestic product (GDP) stood at 4.5 per cent last year, compared with 4.7 per cent in 2004 and 4.9 per cent in 2000. But the figure went as high as 5.4 per cent in 2001 and 2002, and as low as 4.1 per cent in 2007 and 2008 - a variation by nearly a quarter from the peak period to the valley.

Official defence expenditure was 26.2 per cent of nominal government spending last year, compared with 28.3 per cent in 2004 and 25.6 per cent in 2000. The 2000 figure was the decade's low point, and this rose by over a quarter to reach its high at 32.8 per cent in 2006.

In regional terms, Vietnam topped Singapore for much of the past decade in the proportion of GDP spent on defence. Hanoi stood at 7.9 per cent in 2001 but began to slip from 2007 to end the following year at 3.2 per cent and then 3 per cent last year.

Malaysia and Thailand were respectively at 2 per cent and 1.9 per cent last year, the former rather steady over the past decade and the latter showing a slight rise beginning in 2006. The Philippines is next at 0.8 per cent of GDP, down from 1.6 per cent 10 years ago, followed by Indonesia at a relatively stable but meagre 0.7 per cent.

The picture for defence spending as a proportion of nominal government expenditure is similar, with Vietnam initially topping Singapore at 32.6 per cent in 2001 and then sliding steadily to 9.7 per cent last year. The data for Thailand, Malaysia and Indonesia is relatively flat while the Philippines dipped in 2002 and has since remained steady.

Thailand ended last year at 8.7 per cent, Malaysia at 6.4 per cent and Indonesia at 4.7 per cent for defence as a proportion of total government spending. Bangkok began the decade at the same level, then edged downward before climbing after 2006, when former prime minister Thaksin Shinawatra's regime was overthrown. Kuala Lumpur slid from a high of 8.6 per cent in 2006, its subsequent drop by over two percentage points perhaps reflecting economic conditions. Jakarta follows much the same pattern, losing nearly two percentage points since its high of 6.6 per cent in 2005.

Singapore's approach to defence spending is unusual in the broader Asia-Pacific context too. Last year, it was ahead of Australia, China, India, Japan, Pakistan, South Korea and Taiwan in military expenditure as a percentage of GDP. It topped France, Russia and Britain too, but was below the United States. Singapore also spent a higher proportion of its nominal government expenditure on defence than all the other countries listed.

All of which explains Singapore's shift from a 'poison shrimp' strategy - ensuring that any aggression against the country would prove costly - to a 'deter-and-defeat' posture.

[To the critics who asks why must Singapore spend so much on defence, the simple answer is that we have much more to lose.]